Texas attorney general lawsuit charges CVS with cheating Medicaid by exaggerating prices on meds

CVS and Walgreens, the two largest pharmacies in Texas have been charged with cheating the Medicaid program by exagerrating prices on medications and raking in larger reimbursements than they would be allowed.

CVS’ filed a lawsuit in December, stating that the pharmacy had the state’s blessing to use the prices that are now asserted for Medicaid reimbursement. Weeks later, the state filed a lawsuit of its own, accusing CVS of submitting fraudulent reimbursement requests since 2005. That lawsuit, unsealed this month at the end of a five-year investigation, says CVS inflated prices reported to Medicaid by as much as 670 times the customary price. For example, the lawsuit says the pharmacy falsely reported a $999.99 price for over-the-counter eye drops.

The state estimates CVS has made between $128 million and $130 million by falsely reporting the prices, according to Raymond Winter, division chief of the attorney general’s civil Medicaid fraud division.

CVS says in its lawsuit against the state that Texas officials agreed in 2008 that prices the pharmacy offered through the savings pass programs weren’t the pharmacy’s customary prices and therefore weren’t the prices the pharmacy would use in calculating Medicaid payments. In the lawsuit, CVS says that Andy Vasquez, the state’s Medicaid director, confirmed that in a phone call to a CVS vice president.

Jeffrey Newman represents whistleblowers.